Ethiopian Government Slashes Karuturi Global Land Concession

May 4 (Bloomberg) -- Ethiopia slashed the size of Karuturi
Global Ltd.’s land concession that was larger than Luxembourg on
concern it was too big for a single company to manage and to
enable an annual migration of antelope, the government said.

The amendment, which reduced the concession by two-thirds
to 100,000 hectares (247,105 acres), was made in consultation
with Bangalore-based Karuturi six months ago, Esayas Kebede,
head of the Agriculture Ministry’s land investment support
directorate, said in an interview in Addis Ababa, the capital.
Karuturi’s chief executive officer denied the concession had
been reduced.

“We have not received any recent updates on the Karuturi
agricultural business in Ethiopia,” said Archit Singh, an
analyst at Globe Capital Market Ltd., which has a “strong buy”
rating on the company’s stock. “I am not aware of any change in
the lease size,” he said by phone from New Delhi yesterday.

Ethiopia, the country that came to symbolize Africa’s
inability to feed itself in the 1980s, has transferred about
350,000 hectares of agricultural land in the Gambella,
Benishangul-Gumuz and Southern Nations regions since September
2009, according to the Agriculture Ministry’s website. Investors
include companies from Ethiopia, India, China, Saudi Arabia as
well as Ethiopians living abroad. A table on the ministry’s
website shows Karuturi’s allocation is 100,000 hectares.

“Three hundred thousand hectares is a huge area of land.
Nobody can manage it,” Esayas said on April 29. “Therefore,
Karuturi should get a rational and manageable plot of land based
on its own capacity and our monitoring and evaluation capacity.”

‘Baseless’

Karuturi Chief Executive Officer Sai Ramakrishna Karuturi
said reports claiming the government reduced the concession “are
completely baseless.” The company is developing 111,700 hectares
of agricultural land, while 200,000 hectares “continues to be
with us as part of the concession and will be developed in a
phased manner,” he said in an e-mailed statement today.

The company, which has invested $100 million in Ethiopia so
far, plans to have 65,000 hectares in production this year and
sell its first harvest in October mainly within Ethiopia and to
other East African nations, Karuturi said in an e-mailed
statement in February. The company is growing crops including
rice, palm oil, sugar cane and cereals.

Mapping

The boundary of Karuturi’s land wasn’t accurately mapped
when it was first leased by the Gambella Regional Government in
2009, Esayas said. All similar land deals are now handled by the
directorate in the Agriculture Ministry, he said.

“They signed an agreement without any coordinates or
delineation of the land,” he said. “As a federal government,
we should correct that mistake.”

Part of the reason for the amendment to the concession was
to create an 8,000-hectare corridor through Karuturi’s land for
a one-million strong migration of white-eared kob, a type of
antelope, Esayas said.

The annual movement from Southern Sudan into an area that
includes Gambella National Park, which was given a new boundary
in March, is the second-largest mammal migration in Africa,
Cherie Enawgaw, an ecologist at the Ethiopian Wildlife
Conservation Authority, said in a phone interview from Arba
Minch in southern Ethiopia on May 2.

China, India

Among other investors in Ethiopian land are Hunan
Dafengyuan Agriculture Co., a Chinese company, which is
developing 25,000 hectares to grow sugar cane in Gambella, a
fertile state with a relatively low population density,
according to the ministry. Spentex Industries Ltd., a Delhi-based yarnmaker, is growing cotton in the northwestern region of
Benishangul-Gumuz, also on 25,000 hectares, it said. Shapoorji
Pallonji & Co. of India has 50,000 hectares to grow biofuels in
the same region.

Almost all rental fees range from 30 birr ($1.76) to 158
birr per hectare a year, according to the Agriculture Ministry.

Critics of Ethiopia’s land policy, including GRAIN, the
Barcelona-based advocacy group, have argued that domestic
farmers are being dispossessed and the country shouldn’t rent
land cheaply to foreign investors to grow cash crops when about
13 percent of its approximately 80 million people still rely on
food aid.

Ethiopia is prepared to lease 3.6 million hectares of an
available 74.5 million hectares of suitable land if it gets
“real investment,” Esayas said. The government of Africa’s
second-most populous nation, which bars private land ownership,
says the investments will provide technology, jobs, improved
food security and export revenue.

Major investors may receive more land if performance
evaluations, which are done monthly, meet the ministry’s
requirements, according to Esayas.